What’s the difference between Named Perils and Open Perils on a Homeowners Policy?

The insurance world is full of industry vocabulary, industry slang and in general just a bunch of words that the average person doesn’t know, “peril” being one of them. In this blog, we will be discussing the difference between a “named perils” and “open perils” in a homeowners policy.

Why are these important? Understanding what a “peril” is in your homeowners insurance policy is important because of the different types of coverage available. For example, did you know that it is possible to insure valuable items like expensive jewelry or antiques with an open peril? But if said jewelry or antiques are stolen or ruined in a fire, they will be not covered. However, if you have named perils, these items will be covered.

What is a peril?

A “perils" is an insurance name for the items that are covered in a property policy. Depending on what the perils are and what type of coverage you have purchased, perils can either be “named peril” or “open perils.”

What is an open peril?

Open perils provides insurance coverage for most typically any reason. In other words, anything that falls under your home insurance policy will be protected. However, open perils do exclude certain things like those under “home maintenance” categories, for example an old roof, bad gutters, or damage in the event of a flood or nuclear hazard. In other words, open perils insure direct loss of property, but not loss that is is due to general home maintenance, wear and tear or unusual hazards.

In the event of a claim, it is up to the insurance agency to prove why the coverage is excluded if they deny payment.

What are named perils?

Named perils, also known as “broad form,” provide coverage only for those perils listed in the policy, such as fire, theft, and vandalism. In other words, named perils are insured for physical loss that is directly related to a specific situation, for example:

Fire and lightning

Windstorms and hail (Note: this peril does not include loss to property contained in a building, unless the force of wind or hail damages the building first.)

Vandalism

Theft

With named perils, you must show that a loss was caused by a peril listed in the policy in order to submit a valid claim.

Ask about your coverage

What type of peril insurance do you have? Talk to your insurance agent to make sure the coverage you have is enough to insure your valuable and day-to-day items. The world of insurance can be very confusing and full of strange words and industry jargon, which is why understanding your coverage completely and asking questions is very important.